$GLD calls shine

Option traders are scoring big gains on upside positions today in the SPDR Gold Trust (GLD).

On Dec. 18, our Unusual Activity Service detected the purchase of 10,000 March $150 calls for $0.80 as part of a bullish spread with shares at $138.89. This was clearly a new position, as open interest in the strike was only 8,997 contracts before that session began.

Those calls have changed hands for as much as $6.21 this afternoon, more than 7.5 times their purchase price. The stock rose 11.74% in the same time period, underscoring how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

GLD is up 2.98% to $153.65 in afternoon trading, off of its intraday high of $155.24 made earlier today. The exchange-traded fund, which tracks the price of bullion, has rallied after the Federal Reserve announced it would cut its benchmark interest rate by 50 basis points earlier this morning.